John Sattgast July 10, 2017

Despite a negotiated agreement between Republicans and Democrats in the House and Senate, Gov. Jay Inslee vetoed a section of Senate Bill 5977, which would have reduced the business and occupation tax on all manufacturers to match the rate paid by The Boeing Company and other aerospace firms. The action comes after 23 Democratic state representatives signed a letter earlier this week asking the governor to veto the tax preference.

Reps. Terry Nealey, Norma Smith and Brandon Vick also sent a letter Thursday to Inslee on behalf of House Republicans asking him to “honor the agreement.” They responded with disappointment following the governor’s sectional veto of the bill which strips the lower standard tax rate for manufacturing.

“This is a complete slap in the face to our labor work force and our struggling manufacturing industry in the state of Washington. Our caucus negotiated with the other caucuses, including the Democrats, in good faith. We not only had a handshake and an agreement to reduce this tax, but our House Republican members voted for this omnibus bill with the belief this tax reduction would be enacted. This veto jeopardizes the trust of future negotiations,” said Nealey, R-Dayton, who serves as ranking Republican on the House Finance Committee.

“Tragically, the governor has failed to stand with the working men and women of Washington state who pour their blood, sweat and tears into our economy. This veto reveals an extraordinary lack of understanding about the important role advanced manufacturing jobs play in our state,” said Smith, R-Clinton, ranking member of the House Technology and Economic Development Committee.

“Perhaps the governor would like to explain why he was willing to sign into law a tax break for Amazon and Google, but was unwilling to help tens of thousands of middle-class men and women working in thousands of small and midsize manufacturing companies who are making the products that sustain our economy,” she added. “We had a once-in-a-generation opportunity to make this critical sector more competitive with the rest of the world, and that opportunity simply vanished with the stroke of a pen. Make no mistake, the governor will own every manufacturing job lost from this day forward due to his failure of leadership.”

“The governor just said ‘no’ to new economic opportunities and family-wage jobs in Clark County and around our state. This is really disappointing. This is also a major breach of a trust with the bipartisan negotiation process. It’s a bad precedent to set and will hurt future negotiations on critical issues,” said Vick.

Nealey also noted the veto could put Boeing jobs in jeopardy.

“Boeing has been under the microscope of the World Trade Organization which believes the 325 million-dollar tax reduction under the preferential B&O tax rate has given the company an unfair advantage over European competitors. By leveling the playing field among other manufacturers and giving them the same rate as Boeing would have eliminated the last remaining complaint by the WTO,” Nealey explained. “This veto puts Boeing back into the crosshairs of the WTO and could cost Washington jobs.”

In their letter to Inslee, the House Republicans noted there are approximately 290,00 manufacturing employees in Washington state, earning an average of $84,000 in annual income. They said the reduced B&O rate would have allowed firms to hire more employees and provide better pay. The governor’s veto, they say, will likely reduce the chances of manufacturing jobs expanding and put a damper on manufacturers considering relocating to Washington.